Question-and-Answer Session
Operator
Thank you, sir. [Operator Instructions]. Our first question comes from Chris Danely of J. P. Morgan; your question please.
Chris Danely - J. P. Morgan
Thanks and good morning guys.
Donald Colvin - Executive Vice President, Chief Financial Officer and Treasurer
Good morning.
Keith Jackson - President and Chief Executive Officer
Good morning.
Chris Danely - J. P. Morgan
Can you just talk about gross margin trends after Q3, it's in a normal seasonal growth in Q4 and a decent year next year?
Keith Jackson - President and Chief Executive Officer
Well that's a lot a ifs, ands and buts, but in general Chris, we continue to expect product gross margins to expand with volumes, so again as our revenues go up, we get a very nice fall through on that something better than 60%, 65%. So really the revenue is the key driver to answer your question overtime. From a Gresham perspective, the other piece of that, as we get our analog processes qualified here in the fourth quarter, I would expect that those trends will start change in the first quarter of next year as we ramp those products, the analog products and Gresham. So basically, Gresham should start moving in a positive direction by the first quarter and product gross margins will track very well with the revenues.
Chris Danely - J. P. Morgan
Sure. And how should we expect your internal inventory and utilization rates to trend, do they just slowly trend up with sales due?
Keith Jackson - President and Chief Executive Officer
They should slowly trend up with sales, I am... I mean there again we are running roughly 80% utilized at this point, so we've got some lot of room there to run as the company grows and so again I would expect those to again a slowly rise with the rates. We are not looking to increase inventory in the second half, in fact it should come down a bit from a days perspective, so at this point is really keeping a lid on the inventory while growing the activity rates with the revenue.
Chris Danely - J. P. Morgan
Great. And the last question, can you guys just talk about the linearity of your bookings in Q2 and how you feel about the various end markets for the second half of the year?
Keith Jackson - President and Chief Executive Officer
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